China’s Economy Grows 5.3% in H1 2025 Driven by Industrial Output, Exports, and Investment

China H1 2025 Performance

CHINA: China's economy grew by 5.3% year-on-year in H1 2025, reaching RMB 66.05 trillion (USD 9.24 trillion), driven by strong industrial output (6.4%) and services (5.5%), alongside resilient exports and targeted investment. Retail sales rose 5.0%, fixed asset investment increased 2.8%, and per capita disposable income grew 5.4% in real terms, though domestic consumption and real estate remained weak. The second quarter posted 5.2% growth year-on-year and 1.1% quarter-on-quarter.

Foreign trade rose 2.9% year-on-year to RMB 21.79 trillion (US$ 3.05 trillion), with record monthly surpluses in June. Gains were led by exports of autos, semiconductors, and steel, and growing trade with ASEAN, the EU, and Africa. However, risks from geopolitical tensions and U.S. tariffs may weigh on H2 performance. FDI inflows declined 13.2%, but new foreign-invested firms increased by 10.4%, reflecting sustained interest in high-tech and services sectors.

While macroeconomic policy has stabilized expectations, structural issues remain. Weak household demand, shrinking real estate activity, and subdued private investment (down 0.6%) continue to constrain recovery. Policymakers are expected to rely on targeted support rather than broad stimulus, with the second half of 2025 crucial for deepening reforms, boosting investor confidence, and rebalancing growth toward domestic consumption.

Source: China Briefing